CSIT421 COURSE WORK 18th December 2007
Can eBay Continue Growing?
eBay.com is an online auction service whose business model is ideally suited to the Web. eBay stores no inventory and ships no products. Instead, it derives its revenue from the movement of information, an ideal task for the Internet. Since eBay was founded in 1995 by Pierre Omidyar and Jeff Skoll, the company has been profitable, attracting more than 200 million users by 2006. eBay now employs more than 8000 full-time workers and has operations in 32 countries, including an equality investment in MercadoLibre, which services Mexico and eight South American countries. In 2005, eBay users listed 1,8 billion worth of goods changing hands. The number of items listed in 2006 was expected to surpass 2 billion.
eBay has mass appeal because its fully automated auction service helps buyers and sellers trade high-end articles, such as fine art, automobiles, and jewelry, as well as more mundane and practical items, such as clothing, customer electronics, and house wares. Users can list their goods under more than 30 main categories and tens of thousands of subcategories.
The success of eBay relies on a unique formula. eBay derives the bulk of its revenue from fees and commissions associated with its trading services. This revenue, however, is only made possible by the hundreds of thousands of people who put time and effort in to selling goods on eBay but do not work for the company. Nearly half a million people rely on eBay auctions as their main source of income. The seller pays an insertion fee for listing goods that operates on a sliding scale. For example, if the opening bid price tarts between 1 cent and 99 cents, eBay charges the seller a 25-cent insertion ...